Iceland has had a four-day work week since 2019. Seven years later, it delivers on all the promises of Gen Z

Iceland was one of the first countries that dared to experiment with the four-day workday and new working day models maintaining the salary. Today, Iceland has not only managed to reduce the working hours of 86% of its population, but it is also among the most dynamic European economies. These data show that the four-day work week and the reduction of working hours are not incompatible with growth.

Pioneers of the four-day work week. Between 2015 and 2019, the country implemented a pilot program in which 2,500 public employees reduced their working hours from 40 hours a week to between 35 and 36 hours. The Iceland test data indicated that productivity levels were maintained and the well-being of workers who reported lower levels of stress and well-being was considerably improved. improvements in work-life balance.

The reactions were immediate and the Icelandic unions reached agreements with the companies to take this model to other sectors. According to the study monitoring of the experiment of reduction of working hours carried out by the Autonomy Institute of the United Kingdom and the Association for Sustainability and Democracy (ALDA) of Iceland, as a result of those negotiations, 86% of Icelanders already work under some form of reduced hours. “This shows that the public sector is prepared to be a pioneer in reducing the working week, and other governments can learn from this lesson,” said Will Stronge, research director at Autonomy Institute.

Years of implementation are beginning to bear fruit. Monitoring of test data in Iceland has continued to see the long-term effects on the impact of the reduction in working hours both among employees and on the country’s economy. ALDA and the Autonomy Institutejust published a study in which it analyzes the impact after four years of reduced working hours available to the majority of its population. Between 2020 and 2022, for example, 51% of its workforce already had access to reduced working hours, including a four-day work week or a five-day work week with shorter days.

In parallel, the study revealed that Iceland’s economy was growing faster than that of most of its European neighbors. According to the report World Economic Outlook April 2024 prepared by the International Monetary Fund, Iceland’s economy recorded growth of 5.2% for 2024 and 4.9% for 2025.

Greater well-being for employment. The International Monetary Fund report points to the strength of employment in Iceland as one of the keys to its economic growth. According to the ALDA study By 2024, 78% of Icelandic workers are satisfied with their current job. 62% of those who have adopted reduced working hours claim to feel more satisfied with their working hours, while 97% have stated that shorter working hours have made their balance between work and family easier.

Impact on the Icelandic economy. The authors of the study point out that Iceland had always worked more hours than its surrounding countries, obtaining lower productivity. However, they highlight that, after the change in working hours, the productivity in Iceland has increased 1.5% annually on average over the last five years. “This is a possible break with the past, when productivity was lower in Iceland than in neighboring countries.”

The data provided by the study reflect a behavior very similar to that recorded in the test of the Valencia four-day week: Having more free time encourages the local economy and recreational activities. The study estimates the improvement in the internal economy at 10% after implementing reduced working hours.

The key is not the reduction of working hours. The conclusions of the study reflect an idea that was also put on the table in the conclusions of the test of the four-day work week in Germany: “A probable cause of this change (in productivity) is the optimization of work and the reorganization of work shifts as strategies aimed at reducing effective work hours,” the study notes.

This clarification reveals that the key to the successive successes in terms of productivity of the tests of the four-day work week would not be a consequence of the reduction of the working day itself, but of the prior optimization process that is carried out in these experiments.

Happy future. Iceland’s experience is especially positive for generation Z, definitely the labor cohort that most enthusiastically embraces hybrid or reduced work formats. As we have seen in other countries, Sean Norway or Germany, and as various studies point outGeneration Z has a strong preference for the four-day week. Both socio-labor trends and cultural priorities point in that direction. And the case of Iceland is important because it underlines that the economy is not suffering.

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Image | Einar H. Reynis